This article has been updated from a previous version to include comments made by Qiagen interim CEO Thierry Bernard during a conference call on Wednesday recapping Qiagen's earnings.
NEW YORK – Qiagen reported after the close of the market on Tuesday that its fourth quarter revenues increased 3 percent year over year as the company bested analyst estimates on the top and bottom lines.
For the three months ended Dec. 31, Qiagen logged revenues of $413.5 million compared to $403.2 million a year ago and ahead of Wall Street's expectation of $405.6 million. At constant exchange rates (CER), Q4 revenues increased 4 percent year over year, in line with downward-adjusted guidance that the company provided in late October.
"As we go through this period of change at Qiagen, we delivered on our commitments to you all and we continue to focus on attractive growth opportunities across the continuum from life sciences to molecular diagnostics," Thierry Bernard, interim CEO and senior VP and head of molecular diagnostics, said during an earnings call on Wednesday.
"At the same time … we are realistic about our challenges that began in mid-2019 especially in the Asian markets, particularly China, as well as the decline in revenues from companion diagnostic codevelopment due to the changes in our clinical NGS strategy announced in October," Bernard said.
In Q4, consumables and related revenues grew 6 percent (CER 7 percent) to $364 million, while instrument sales dropped 17 percent (CER 16) to $49 million. Qiagen noted in a statement that lower instrument revenues reflected a sharp decline in sales of the GeneReader next-generation sequencing system in the wake of discontinuing its development, as well as a shift to reagent-rental agreements in which revenues are generated through consumables over a rental contract period. However, placements of the company's QiaSymphony lab testing automation and QiaStat-Dex syndromic testing systems were "solid," with QiaSymphony surpassing 2,500 cumulative placements and QiaStat-Dx approaching 1,000 cumulative placements at the end of 2019.
QiaSymphony "has really become a steady and consistent growth engine for Qiagen in particular as an anchor to our leadership in sample processing, and we continue to plan for more than 200 new placements in 2020," Bernard said.
By customer class in Q4, molecular diagnostics revenues rose 2 percent (CER 3 percent) to $198 million, while life sciences revenues grew 3 percent (CER 4 percent) to $216 million.
Molecular diagnostics revenues in Q4 included companion diagnostic codevelopment revenues of $9 million, a 55 percent drop (CER 54 percent) from a year ago. This weakness was expected due to the decision to end CDx development projects on the GeneReader system and shift to a new clinical development deal with Illumina.
Sales of the company's QuantiFeron latent tuberculosis testing products rose 1 percent at CER buoyed by a high-single-digit growth rate in the Americas and EMEA regions but were dragged down by lower sales in Asia, particularly China and Japan.
"Although we saw a slowdown in the fourth quarter in QuantiFeron latent tuberculosis test sales, which was due mainly to adverse trends in the Asia-Pacific region, the test had full-year sales growth of 10 percent CER in 2019," Bernard said, noting that a key development in the fourth quarter was the US regulatory approval of the assay for use on the DiaSorin Liaison system, which had previously received European clearance in 2018.
Qiagen recorded Q4 net income of $44.9 million, or $.19 per share, compared to net income of $61.0 million, or $.26 per share, a year ago. On an adjusted basis, Qiagen reported earnings per share of $.48, beating analysts' consensus estimate of $.44 and ahead of previously downward-adjusted guidance of $.45 to $.46. The company took an after-tax restructuring charge of $24.9 million, or a net loss of about $.12 per share, in Q4 related to the discontinuation of GeneReader.
Qiagen's fourth quarter R&D expenses fell 16 percent to $34.0 million from $40.7 million, while its SG&A expenses rose 2 percent to $123.6 million from $121.2 million.
For full-year 2019, Qiagen reported revenues of $1.53 billion, up 2 percent (CER 4 percent) from $1.50 billion in 2018, and ahead of the Wall Street consensus estimate of $1.52 billion.
Consumables and related revenues grew 3 percent (CER 6 percent) in 2019 to $1.35 billion, while instrument sales fell 8 percent (CER 5 percent) to $172 million.
By customer class, molecular diagnostics revenues grew 1 percent (CER 4 percent) to $737 million, while life sciences revenues grew 2 percent (CER 5 percent) to $789 million. Full-year molecular diagnostics revenues included expected lowered companion diagnostic sales of $42 million, a 28 percent year-over-year drop.
Qiagen reported a 2019 net loss of $41.5 million, or $.18 per share, compared to net income of $190.4 million, or $.82 per share, in 2018. On an adjusted basis, Qiagen recorded 2019 net income of $1.43, ahead of analysts' consensus estimate of $1.40. The company took an after-tax restructuring charge of $24.9 million, or a net loss of about $.12 per share, in Q4 related to the discontinuation of GeneReader.
Results for 2019 included an after-tax charge of $1.01 per share for the aforementioned restructuring measures.
Qiagen's 2019 R&D spending fell 2 percent to $157.4 million from $161.9 million in 2018, while its SG&A expenses rose 1 percent to $504.2 million from $496.9 million.
Qiagen finished 2019 with $623.6 million in cash and cash equivalents and $129.6 million in short-term investments.
For full-year 2020 Qiagen said that it expects net sales growth of 3 percent to 4 percent at CER and adjusted EPS of $1.52 to $1.54 per share at CER. On average, analysts are expecting full-year EPS of $1.49.
The sales outlook takes into consideration overall growth in the company's sample-to-answer product portfolio offset by significant headwinds from an anticipated double-digit CER decline in companion diagnostic codevelopment revenues due to the new NGS strategy.
The outlook also takes into account expectations for lower sales in China in the first half of the year mainly due to a slowdown in orders from distributors that began in mid-2019 and the end of its China NGS joint venture announced last year.
"We have announced a balanced outlook that sets realistically ambitious goals that capitalize on growth opportunities in our sample-to-insight portfolio while also addressing the challenges that carry over from 2019," Bernard said.
For the first quarter of 2020, net sales are expected to grow about 2 percent to 3 percent at CER, while adjusted EPS is expected to be $.28 to $.29 at CER. On average, analysts are expecting Q1 EPS of $.28.
In late morning Wednesday trading on the New York Stock Exchange, shares of Qiagen were up about 6 percent at $35.14.